In the ideal world we would all have medical aid cover from the time of our birth. Unfortunately this is not the case – at least not in South Africa. Medical aid is essentially a private insurance and the onus is on you as an individual to sign up for cover and include your dependants, both adults and children. While the public health system is there to provide medical care for all South Africans, it may not be the desirable option for everybody. Medical aid is the only other way to enjoy the benefits of private healthcare. But if you have not been a medical aid member before the age of 35 years, then you need to be aware of some of the implications particularly in terms of costing.
Late Joiner Penalty Calculations
Any given medical aid plan costs the same for every person, irrespective of their income level, health status or pre-existing conditions. However, your age is one factor that can alter the price. It is not a concern if you are younger than 35 years of age. But after 35 you are liable for a late joiner penalty. It is essentially a fee added to the regular monthly contribution and it is a permanent penalty. You will have to continue paying this additional fee along with your regular premium for as long as you remain on the medical aid.
The way this penalty is calculated is not solely dependent on your age beyond 35 years. While the older you are when you join a medical aid will add up to a higher monthly medical aid premium, the scheme will also consider any years of prior medical aid cover before you turned 35. But this is only dependent on you having proof that you were a member of a medical aid in the past. If you were a member of a medical aid very early in life or just for a short period of time before turning 35 years, then it will not significantly assist in reducing your late joiner penalty.
Medical Aids Accept All Ages But At A Cost
One of the biggest problems that the medical aid industry is facing in recent times is senior citizens signing up for medical aid for the first time in their life. This means that older people, who will naturally need more frequent and greater medical care, now want to start up on medical aid cover. Medical aids accept any South African of any age but older or sicker members cause a greater financial strain on the scheme. Therefore pensioners will face one of the highest late joiner penalties, sometimes an additional 75% of the regular medical aid premium.
In addition, medical aids implement waiting periods – a 3 month general waiting period and a 12 month pre-existing condition waiting period. The 3 month period means that you cannot make any medical aid claim for the first 3 months of joining a scheme despite paying your premiums in this time. The 12 month waiting period is applicable to pre-existing conditions where the scheme will not pay for any medical services or treatment related to a condition that you had prior to joining the medical aid. It also applies to medical aid for pregnancy prior to active membership.
So even if you are prepared to pay the late joiner penalty, do not expect your cover to start immediately. These waiting periods in conjunction with the late joiner penalty are some of the ways that medical aids have managed to limit some of the risk and financial drain by pensioners who were not members from a younger age.
Is A Higher Premium For Older People Unfair?
Are medical aids discriminating against older people? Actually they are not. Medical schemes work by pooling the contributions of all its members – young or old, sick or healthy. It then pays out for medical services needed by those who are ill. In the ideal setting, a medical aid would have more young members who are healthy and contributing to the scheme, but not needing much medical care. In this way, the scheme can allocate funds to the minority of members who need it, while accruing reserves.
However, the situation is not as ideal in South Africa. Many people choose not to, or cannot afford to, contribute to a medical scheme while they are young and healthy. Instead they opt for medical aid cover when they are elderly or sick. This means they drain the resources of those who have been loyally contributing to the scheme for years or even decades without claiming. Since medical aids by law cannot refuse membership to any South African of any age, they have to implement measures to limit the drain on the scheme’s reserves.
The later joiner fee and waiting periods are some of these measures. If you still think it is unfair then consider this – would you only sign up for car insurance after you had an accident and then expect the insurer to pay for your vehicle damage? Alternatively, imagine having started up on medical aid at 25 years of age and making the financial sacrifices to ensure that you and your family are covered in all this time. How would you feel if an older or sick person who did not make these same financial sacrifices suddenly joins your medical aid scheme and drains its resources? Then consider the financial implications for the scheme – it would just not be sustainable.
The principle behind joining a medical aid is simple – sign up while you are young and healthy. If you really could not afford it, then it is unfortunate that you will be liable for the late joiner fee after 35 years of age. But if you chose not to spend your money on medical aid cover while you were young and healthy, then expect to pay more later when you are older and mostly likely in poorer health.